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11. Peng Corporation is considering the purchase of new equipment costing $30,000. The projected annual after-tax net income from the equipment is $1,200, after deducting $10,000 for depreciation. The revenue is to be received at the end of each year. The machine has a useful life of four years and no salvage value. Peng requires a 12% return on its investments. Use PV tables and the space below to calculate the break-even time for this equipment. Based on these computations, A) Break-even time is longer than four years. B) Break-even time is between three and four years. C) Break-even time is between two and three years D) Break-even time is between one and two years. E) This project will never break even. 12. An estimate of an asset's value to the company, calculated by discounting the future cash flows the investment at an appropriate rate and then subtracting the initial cost of the investment is known as A) Annual net cash flows B) Rate of retum on investment. C) Net present value. D) Payback period. E) Unamortized carrying value. 13. 82 Which of the following cash flows is not considered when using the net present value method? A) Future cash inflows B) Future cash outfiows. C) Past cash outflows. D) Nonuniform cash inflows. E) Cash inflow from the sale of the asset. 14. A company bought a machine that has an expected life of six years and no salvage value. Management estimates that this machine will generate annual after-tax net income of $700. the accounting rate of return is 10%, what was the purchase price of the machine? A) $7,000 B) $700 C) $28,000 D) $14,000 E) $3,500 The time expected to pass before the net cash flows from an investment would return its initial cost is called the: A) Amortization period. B) Discounted cash flow period. c) Interest period D) Budgeting period. E) Payback period

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